While a report from the Commerce Department this month showed the first negative savings rate since 1933, nonprofits around the nation are showing that turning this trend around is not as hard as it might seem, even among those with the lowest incomes. In fact, there is growing evidence that the poorest among us can and will save -- if provided incentives and structure. Encouraging and enabling savings, especially among the working poor, is a powerful tool for the economy that deserves the attention of local policymakers now.

All levels of government are grappling with how to help poor families create prosperity and decrease their dependence on government assistance, and encouraging savings is a proven solution. In the late 1990s, a trial program by local nonprofit organizations nationwide matched the savings of working-poor families, but restricted all funds to buying homes, starting micro-businesses or attending college. This project showed that even households below the poverty line were able to save and invest in assets like homes and education that helped created economic opportunity.

Two of the nation's largest matched-savings programs are in the Bay Area. The Assets for All Alliance and EARN (Earned Assets Resource Network) are high-performing nonprofit organizations that have demonstrated that even working-poor households in what is arguably the nation's most expensive region can save and invest in assets that help them get ahead.

The Assets for All Alliance, a project of Lenders for Community Development in San Jose, has helped about 1,500 local families save and invest since 1999. More than 700 of these low-income families have invested in household assets; 130 are new homeowners. EARN's 1,000 participating families and individuals in San Francisco have consistently saved 5 percent and more of their gross income -- despite averaging less than $20,000 per year in household income. Together, these 2,500 Bay Area households have saved $2.8 million of their own money since 1999.

While clients from Assets for All and EARN have discipline and focus, the participants in programs like these are not exceptions to the rule. "I'm not an overachiever," explains Maria Sánchez, an EARN saver who recently used funds from her matched account as part of a down payment on a home in Oakland. "I just created a goal that I knew would change the rest of my life, and EARN made it easy for me."

Encouraging savings should be an easy policy decision for local government. We applaud Santa Clara, San Francisco and San Mateo counties for encouraging savings for investment and supporting these efforts for the past six years. But if policymakers are sincere about making the American dream attainable for more than the 2,500 discussed here, then the encouragement of savings must be institutionalized in systems that extend beyond the nonprofit organizations that are currently involved.

Local governments can act by emulating the success seen in the way Santa Clara, San Francisco and San Mateo Counties are investing in their working-poor families -- funding matched savings programs. Other opportunities involve encouraging families to take advantage of the federal earned income tax credit through outreach and education. This is a chance for local communities to claim the tens of millions of federal tax dollars they leave on the table every year.

These are lean times for county governments, and calls to fund efforts that help people save will undoubtedly encounter opposition based on costs. But such costs are not just throwaway expenditures -- they are concrete, measurable investments that create returns. For example, the local working-poor families who have already invested their savings have leveraged over $50 million in capital in home mortgages, small-business capital and educational grants and loans.

Imagine the multiple on this total if incentives for savings became public policies to spur economic development. One example of this is a bill introduced by Assemblymember Johan Klehs, D-Hayward, which would allow California state income tax filers to split their refunds into "money to spend" and "money to save." Recent community pilot projects have proven that when saving is made easier for low income people, they save more. The state can also stop penalizing recipients of public benefits who lose important subsidies like child care when they save over $2,000. Eliminating this powerful disincentive to save would help hardworking, low-income California families get ahead. The negative savings rate of 2005 is a clear signal that we need to act now.